I started to work for my new company since summer 2006 being on F1-OPT. Since then the company applied for H1b which became effective at the end of January, 2007 (quota exempt). While I was working on OPT, I had Fica tax withheld for 2 months and then I talked to HR explaining her that I shouldn't be withheld Fica as I am going to file taxes as non-resident for 2006 (I haven't been in the country for 5 yrs yet). I didn't file for Fica returm - seemed too complex. So now, when I have H1b, I don't see Fica withdrawal on my paycheck. What's interesting is that my net salary is the same but the salary before taxes is higher as if the Fica would have been subtracted from my salary even though the paystub reflects Fica -0 . Maybe, their software doesn't allow to not subtract Fica. Anyway, it looks like this year I must file as a resident and I am afraid that either IRS or employer would force me to pay Fica for the entire year. Any suggestions?

MrDoc:

You became liable for Social Security and Medicare taxes the day the H-1B vsa became effective. You need to contact your HR department and make arrangements for these taxes to be paid. It is YOUR legal obligation to correct this error.

As for the FICA taxes withheld in 2006, the filing of Form 843 can be a bit daunting for a layman, but it is relatively easy for a professional. Contact me via email with the informationa from your 2006 W-2 and I can do a quick cost-benefit analysis of filing for a refund for these taxes from 2006.